Socio-economic Impact of Agricultural Loan in Rupandehi District, Nepal

Abstract

The socioeconomic implications of agricultural loans on smallholder farmers in Nepal's Rupandehi District are examined in this study. It examines the main economic, institutional, and demographic factors influencing credit availability and use. utilizing information from 120 participants, comprising both borrowers and non-borrowers. The study assesses livelihood outcomes, shifts in income levels, and loan usage trends. Findings show that the household head's gender, educational attainment, and involvement in agriculture all have a substantial impact on borrowing behavior. Higher educated farmers had easier access to formal agricultural credit because they were more financially literate and familiar with lending processes; yet, demand for farm loans decreased when diversification into non-agricultural occupations was made easier by such education. Additionally, households headed by women had greater access to credit, which is indicative of the effects of gender-inclusive rural finance policy and targeted lending programs. In order to boost income and accumulate assets, the majority of loans came from savings and credit cooperatives and were mostly used for infrastructure development and poultry farming. Despite these advantages, borrowers faced a number of difficulties, including as strict collateral requirements, restricted insurance coverage, and bureaucratic holdups. According to the study's findings, agricultural credit is an essential tool for raising rural livelihoods; nevertheless, institutional changes are needed to improve credit delivery mechanisms, lower access barriers, and guarantee that agricultural finance promotes sustainable and equitable rural development.